House GOP effort to avert default on debt fails

Wednesday

Oct 16, 2013 at 12:01 AMOct 16, 2013 at 12:42 PM

WASHINGTON - With the federal government on the brink of a default, a House Republican effort to end the shutdown and extend the Treasury's borrowing authority collapsed last night as a major credit agency warned that the United States was on the verge of a costly ratings downgrade.

WASHINGTON — With the federal government on the brink of a default, a House Republican effort to end the shutdown and extend the Treasury’s borrowing authority collapsed last night as a major credit agency warned that the United States was on the verge of a costly ratings downgrade.

After the failure of the House Republican leadership to find enough support for its latest proposal to end the fiscal crisis, the Senate’s Democratic and Republican leaders immediately restarted negotiations to find a bipartisan path forward. A spokesman for Sen. Harry Reid of Nevada, the majority leader, said Reid was “optimistic that an agreement is within reach” with Sen. Mitch McConnell of Kentucky, the Republican leader.

With so little time left, chances rose that a resolution would not be approved by Congress and sent to President Barack Obama before Thursday, when the government is left with only its cash on hand to pay the nation’s bills.

“It’s very, very serious,” warned Sen. John McCain, R-Ariz. “Republicans have to understand we have lost this battle, as I predicted weeks ago, that we would not be able to win because we were demanding something that was not achievable.”

A day that was supposed to bring Washington to the edge of resolving the fiscal showdown instead seemed to bring chaos and retrenching. And a bitter fight that had begun over stripping money from the president’s signature health-care law had essentially descended in the House into one over whether lawmakers and their staff members would pay the full cost of their health-insurance premiums, unlike most workers at U.S. companies, and how to restrict the administration from using flexibility to extend the debt limit beyond a fixed deadline.

Even so, House Speaker John Boehner, R-West Chester, and his leadership team failed in repeated attempts to bring their troops behind any bill that would reopen the government and extend the Treasury’s debt limit on terms significantly reduced from their original push against funding for the health-care law. The House’s hard-core conservatives and some more-pragmatic Republicans were nearing open revolt, and the leadership was forced twice to back away from proposals it floated, the second time sending lawmakers home for the night to await a decision on how to proceed today.

The House setback returned the focus to the Senate, where the leadership had suspended talks after the Senate Republican leadership opted to give the House a chance to produce an alternative to the Senate measure taking shape.

Under the emerging Senate deal, the government would be funded through Jan. 15 and the debt limit extended until Feb. 7. House and Senate negotiators would be required to reach accord on a detailed tax-and-spending blueprint for the next decade by Dec. 13. A proposal to delay the imposition of a tax on medical devices had been dropped from the deal, as had a complicated tax on self-insured unions and businesses participating in the health-care exchanges. All that remained for Republicans was language-tightening income-verification for people seeking subsidies on the insurance exchanges, but that language was still being negotiated.

It remained unclear whether the Senate plan could pass the House or even whether Boehner would bring it forward for a vote. The hopes for a resolution by Thursday also appeared to rest with the senators who had begun the failed movement to tie any further government funding to the gutting of the Affordable Care Act: Ted Cruz, R-Texas, and Mike Lee, R-Utah.

If Reid and McConnell reach a final accord, Senate leaders expect to use a parliamentary maneuver that will allow the majority leader to move the deal to the Senate floor quickly today. With unanimous consent, a final vote would come the same day. But if Senate hard-liners object, the Senate would have to wait until Friday and then muster 60 votes to cut off debate. Further obstruction would mean that the final vote would happen Saturday, when the bill would go back to the House, where it would pass only if it had overwhelming Democratic support, because many Republicans would not vote for it.

In the midst of the turmoil, the credit rating agency Fitch put the United States on a “negative ratings watch,” warning that congressional intransigence had put the full faith and credit of the government at risk.

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